Barack Obama and Binyamin Netanyahu today sought to paper over the deep political rift between the US and Israel and publicly avoided any mention of the main areas of friction, including the continued expansion of Jewish settlements.

In stark contrast to their last meeting, in March, when Obama humiliated Netanyahu by refusing to hold a press conference with him and leaving the Israeli prime minister to eat dinner alone at the White House, the president described their latest discussions as excellent. Seated alongside Netanyahu in the Oval Office, Obama said he believed the Israeli prime minister was a man of peace.

"I think he's willing to take risks for peace," said Obama.

Netanyahu added: "We're committed to that peace. I'm committed to that peace. And this peace will better the lives of Israelis, Palestinians, and certainly would change our region.

"Israelis are prepared to do a lot to get that peace in place but they want to make sure that after all the steps we take that what we get is a secure peace," he said. "It is high time to begin direct talks [with the Palestinians]."

Obama praised Israel for easing the blockade on Gaza following the international outcry over its deadly raid on a flotilla of aid ships in which eight Turkish activists were killed. The US president said he recognised the Jewish state's "unique security requirements".

Despite the dramatic change in public tone, there was little sign of significant movement on the underlying issues that led the Israeli ambassador to the US, Michael Oren, to say last month there had been a "tectonic shift" in relations.

The two leaders avoided speaking publicly about the issues that have led some in his administration to question whether the Israeli government is as serious about negotiations as it says.

Obama said nothing about the continued construction of Jewish settlements in occupied East Jerusalem which had prompted a bitter showdown in March after the Israeli authorities announced the building of 1,600 more homes exclusively for Jews while the US vice-president, Joe Biden, was visiting Jerusalem. Washington viewed that as a sign of contempt and evidence of Israeli indifference to the political impact of the construction on peace prospects.

Neither was there any mention of an extension to the partial freeze on building in Jewish settlements in the West Bank, which is due to expire in September.

Some members of Netanyahu's coalition cabinet, such as Benny Begin, son of the former hardline prime minister Menachem Begin, have said construction will resume at full force because there is little prospect of a peace agreement.

"The prime minister said a few times that the status of settlements would be determined only in a final-status peace agreement with our neighbours," he told Israel Radio. "Such agreement is not imminent at all. In the meantime, we have to ensure that our settlements are developed."

Obama denied there had been any rift with Israel or its prime minister.

"I trusted prime minister Netanyahu since I met him before I was elected president. He is dealing with a very complex situation in a very tough neighbourhood," he said.

The president noted that the two sides have held five tentative meetings, known as proximity talks, under the guidance of the US Middle East envoy, George Mitchell. But the Palestinians continue to suspect that Netanyahu is paying lip service to the establishment of their own state in order to pacify the Americans.

The Palestinian president, Mahmoud Abbas, told Jordanian journalists that initial talks with Israel had not made any progress.

Earlier this week an Arabic-language newspaper in London reported that Abbas had submitted written proposals to Mitchell on core issues such as the borders of a Palestinian state and Jerusalem. According to the report, the Palestinians are prepared to consider a land swap that would allow Israel to retain the major Jewish settlements. But, according to the proposal, the Palestinians would gain control of East Jerusalem with the exception of the religiously significant Jewish quarter of the Old City and the Wailing Wall.

The reality of the settlements was highlighted by a new report by the leading Israeli human rights group, B'Tselem, today, which said that Jewish settlements now control nearly half of all land in the occupied West Bank.

The report said that the settlements take over land far beyond their nominal boundaries, ostensibly for security, much of it privately owned by Palestinians in breach of an Israeli supreme court ruling. B'Tselem calculated that more than 42% of the West Bank is under the control of the 300,000 Israeli settlers who live there. Settler organisations say the settlements control less than 10%.